Ski enthusiasts are seen at Tianding Mountain Ski Resort in Changchun, northeast China's Jilin Province, on Jan. 25, 2024. Boasting abundant ice and snow resources, Jilin Province in northeast China continues to optimize its tourism service to gain prominence as one of the most popular winter destinations for tourists. (Xinhua/Chen Yehua)

China's services sector continued to expand at a solid pace as the year began, with the Caixin services purchasing managers' index (PMI), a private gauge of the country's services sector, coming in at 52.7 in January, according to a private survey released on Monday.

While the expansion slowed slightly by 0.2 points compared with December 2023, it was still at the second-highest level in six months. The index has remained in expansion mode since January 2023, according to the Caixin report.

Chinese services providers registered a further increase in overall new business at the start of 2024, thereby stretching the current period of expansion to just over a year, read the report.

Employment increased slightly for the second straight month, and companies were generally upbeat about the 12-month outlook for activity, it said.

Business confidence regarding the year-ahead outlook for activity remained strongly positive at the start of 2024. Upbeat growth projections were generally linked to forecasts of stronger market demand, increased customer numbers and planned company expansions. 

However, the overall degree of optimism fell to a three-month low, it continued.

Wang Zhe, senior economist at Caixin Insight Group, said in the report that "supply and demand continued to expand in January, represented by growth in business activity and total new orders that carried into the 13th straight month.

"The improved market resulted in growth in business output and sales, though at a slower pace than in the previous month. Services exports continued to rise, with new export orders increasing for the fifth consecutive month," Wang said.

According to data released by China's Ministry of Commerce on Thursday, the value of China's services trade expanded 10 percent year-on-year to 6.575 trillion yuan ($915.6 billion) in 2023, a new record, driven by an uptick in knowledge-intensive and travel services trade.

The services sector has continued to act as a primary engine driving economic growth. The sector's value-added in 2023 reached 68.8 trillion yuan, up 5.8 percent from the previous year. Its contribution to overall national economic growth stood at 60.2 percent, data released by the National Bureau of Statistics (NBS) showed.

China has witnessed a sustained recovery in consumer confidence, with the services sector maintaining a positive trend of recovery, Zhou Maohua, a macroeconomic analyst at Everbright Bank, told the Global Times on Monday.

Taking into account China's overall recovery, official announcements on non-manufacturing business activity, and seasonal factors, domestic services industries such as transportation and logistics maintained a high level of prosperity, Zhou said.

The NBS survey showed that the business activity index for the services sector stood at 50.1 in January, up 0.8 points from the previous month, entering the expansion zone.

The official PMI survey covers large and state-owned companies, while the Caixin PMI survey covers small and medium-sized enterprises.

The ongoing improvement of the services industry is expected to create more jobs, leading to improvements in the employment structure and growth in household incomes, Zhou said.

From the perspective of upgrading consumption in China, the growth potential in the services market is enormous. There is a promising outlook for the further release of demand in the sector, leading to an anticipated acceleration in the expansion of services activity in 2024, Zhou noted.